U of M president Kaler's contract OK'd by regents

The University of Minnesota regents extended President Eric Kaler's contract until 2020 after heaping lavish praise on his performance.

The new contract raises his base salary by 2.5 percent to $625,250 in 2014-15 and offers him major retirement contributions increases. By 2020, those contributions, now at about $83,800 in total, will reach $362,700 a year. Kaler's total compensation will top $987,000 if his salary remains flat.

With a year remaining on Kaler's old contract, the Board of Regents opted to give him a raise and negotiate an extension. They cited concern another university might recruit him away.

Kaler's new compensation package ranks him at No. 6 among his counterparts at Big Ten universities.

Kaler, an alumnus who took over the university in 2011, recently got a glowing annual review. Regents said Wednesday they are getting "great excellence at a reasonable price," as Clyde Allen put it. A couple said that if Kaler's continues to deliver on the job, his compensation should climb faster.

"We had very high expectations for the president," Allen said. "He has exceeded them day in and day out."

Nationally, pay for top campus administrators continues to rise steadily even as colleges and universities face growing financial pressures.

In its annual presidential pay survey earlier this year, the Chronicle of Higher Education ranked Kaler's base pay 12th among 250 state flagship institutions and public research universities with enrollments of at least 10,000 students. His total compensation of $693,150 last year came in at No. 27th.

Regents hailed what they deem a turnaround in the U's relationship with state lawmakers, who have boosted funding after years of cuts. Last year, Kaler and legislators agreed to a two-year resident undergraduate tuition freeze in exchange for a state aid increase.

Board Chair Richard Beeson, who helped negotiate the new contract, praised Kaler's efforts to reduce administrative expenses, a long-standing source of criticism for the U.

He noted a boost in the university's research investments and a new agreement with long-time partner Fairview Health seen as a key step in restoring the U's medical school's national reputation. He praised Kaler's fundraising chops.

Beeson said the 2.5 percent salary increase is in line with merit-based raises offered to all employees this year. Future raises will be based on performance.

Under the old contract, the university set aside $50,000 a year for Kaler's retirement in addition to about $33,800 in contributions through the faculty retirement plan. This coming school year, the $50,000 sum will jump to $125,000. After that, it will grow by $25,000 a year until the final year of the contract, when it will increase by $100,000 -- an incentive for Kaler to stick around through the decade, Beeson said.

The contract also makes more minor changes to the president's life and disability insurance coverage.

"I am honored to be the president of this great institution, and I am grateful for your support," Kaler told the regents.

Kaler, who oversees a statewide system of five campuses, has declined raises the Board of Regents has offered him in the past, asking that the money go toward student scholarships.

Under his new contract, Steven Rosenstone, the chancellor of the Minnesota State Colleges and Universities system, will make $387,250 in base salary in 2014-15.

He also will get $43,200 a year for housing, $15,000 for transportation, $7,800 for professional development, $7,200 for travel and $3,960 for communication.